Reputation the Hardest Risk to Manage, Says New ACE Research
LONDON -- July 23, 2013
92% of companies believe that reputational risk is the most challenging
category of risk to manage, according to a major new study from ACE Group
conducted across 15 countries within its EMEA (Europe, Middle East and Africa)
ACE’s report, ‘Reputation at Risk’, published today, is the latest in its
series of EMEA Risk Briefings examining new and emerging risks. It reveals
that while 81% of companies in the survey see reputation as their most
significant asset, most of them admit that they struggle to protect it and
identifies a number of key reasons why companies in the region often find
reputational risk challenging to manage:
*77% of companies find it difficult to quantify the financial impact of
reputational risk on their business, making it harder to measure than
traditional, more tangible risks.
*68% of companies believe information and advice about how to manage
reputational risk is hard to find, compounding the sense of uncertainty
and confusion about how best to manage it.
*66% of companies feel inadequately covered for reputational risk from an
*56% of companies say social media has greatly exacerbated the potential
for reputational risk to affect their business.
The report also proposes a number of solutions to adopt, including:
*Companies need a clear framework for managing reputational risk. Effective
management of ‘traditional risks’ will help avoid reputational events, and
management teams need to put in place a culture and instil a risk appetite
across the company that will reduce the potential for crises to emerge in
the first place. In addition, taking a multi-disciplinary approach that
involves the CEO, PR specialists and other business leaders will also help
to build the broader perspective that is necessary for identifying and
managing less obvious reputational risks.
*Companies should work harder at measuring how their reputation is
perceived. Understanding perceptions of key stakeholders, their interplay
and their impact on corporate reputation, is essential for tracking and
managing reputational risk effectively. Companies must ensure that they
are collecting an “outside-in” perspective to complement their own
*Companies should sharpen up their crisis management plans to keep pace
with today’s faster-moving world. Our research suggests that many
companies may be over-confident in their abilities to respond to a crisis.
Regular review and testing – including the incorporation of social media
scenarios – will allow a faster response when disaster strikes.
*The insurance market can do more to help companies manage reputational
risk. This includes the provision of more holistic solutions that include
crisis response assistance. It also includes helping companies to take a
‘reputational lens’ to more traditional risks to evaluate the reputational
consequences in each case.
Andrew Kendrick, President, ACE European Group, said:
“Reputational risk can be difficult to predict. However, some clear pointers
emerge from our research as to the source of companies’ key worries. One of
these is the globalisation of business, with complex supply chains, expansion
into new markets and the challenge of maintaining consistent standards across
multiple borders all giving cause for concern. The other noticeable theme is
regulation. Post-crisis, compliance has taken on a new importance and
businesses of all shapes and sizes are more keenly aware of its relationship
to their corporate reputation.
“Insurance is not a panacea for the fast-evolving world of reputational risk.
Nevertheless, I believe there is much that insurers and brokers can do
collectively to help their clients. This includes the evolution of new more
holistic insurance solutions that involve the input of crisis and PR
specialists. More generally, professional risk engineering can help to improve
risk management processes and governance, allowing clients to manage the more
‘traditional risks’ better and reducing the likelihood of a reputational event
in the first place.”
To view the full report ‘Reputation at Risk’ along with ‘top ten tips’ for
managing reputational risk, please visit www.acegroup.com/eu
The ACE Group is one of the world’s largest multiline property and casualty
insurers. With operations in 53 countries, ACE provides commercial and
personal property and casualty insurance, personal accident and supplemental
health insurance, reinsurance and life insurance to a diverse group of
clients. ACE Limited, the parent company of the ACE Group, is listed on the
New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index.
Notes to editors:
The research for ACE was carried out between April and June 2013 by Longitude
Research, who spoke to 650 risk managers, CROs, CFOs, COOs and other
executives responsible for buying insurance from companies with turnover of
US$250 million+ in 15 countries.
Juliet Massey, Communications Manager EMEA
Tel: +44 (0)20 7173 7793
Tel: +44 (0)20 7618 9100
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